Buying Employees a Meal

by WP
(Canada)

When an employer takes an employee out for lunch while on a business trip, how is the 50% applied or an employee pays for their lunch while away for business?

Total Lunch $33.60

Debit Meals Expense: 15.00
Debit Owners Drawings (Shareholder Loan): 18.60
Debit GST Pd On Purchases: 1.80
Credit Bank: 33.60

Hi WP,

It's my understanding that you would book both of your scenarios where the employer and employee go out to lunch while on a business trip as follows:

DR Meals Expense 100% excluding sales tax as it is a legitimate business expense
DR Sales Tax Expensed 50%
DR Sales Tax Payable 50% (ITCs to claim)
CR Bank 100%

When the tax return is prepared, the meals will be claimed at 50%.

If you don't claim only 50% of the ITC each time you book a meal, you can make a adjusting at year-end to remove 50% of the ITCs.

If they are just out and about on business in the area they live (not on a trip), the meal is probably a personal expense ... but it depends on the individual situation and circumstance.








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